A strategic union can bring greater fortune than staying single

5th June 2009 at 01:00
Colleges are under growing pressure to pool resources. So when should they consider finding a suitable partner? And how do they make sure they end up with a marriage made in heaven? Alan Thomson reports

It is easy to forget that 15 years ago there were about 100 more further education colleges in England than there are today. The majority that vanished from the map, in name at least, were colleges that merged with or were in effect taken over by other institutions. The Association of Colleges notes that 83 mergers have taken place since incorporation in 1993.

Some say there still are too many colleges; others maintain that localism and diversity are key to the sector's future.

The political climate is cool on mergers. John Denham, the Skills Secretary, told the AoC conference in November 2007 that there was no evidence that bigger meant better. The Evidence Base on College Size and Mergers in the FE Sector, a study for the Department for Innovation, Universities and Skills published in September 2008, found no well- grounded evidence in support of large institutions generally. This followed FE Colleges - Models for Success, another Dius document published the previous month, which said: "We are concerned that, in some cases, mergers may actually be detrimental to the interests of learners, employers and communities, in terms of reducing choice and potentially undermining local ownership and accountability."

In 2007 and 2008, what some described as a merger mania gripped FE. At the time of Mr Denham's speech to the AoC, about 35 colleges were in merger discussions. Eight joined forces in 2007, the highest number since 2000.

Peter Tavernor, principal of The Manchester College, created from the merger of Manchester College of Arts and Technology and Manchester City College in August 2008, attributes some enthusiasm for mergers to "an element of vanity" among principals keen to expand their empires.

Dius refuses to disclose exactly how many applications for merger it is considering now, saying only that "a handful" have been submitted since October. Some in the sector reckon it is around 10. Only two have been approved so far this year (see panel).

In the long term, however, it seems likely that the Government will be unable to prevent colleges joining forces. The sector is already predicting more mergers as public sector funding is squeezed and colleges are forced to reassess their financial viability and ability to meet learners' demands.

Mr Tavernor thinks the number of colleges could fall by a third over the next five years, leaving England with about 250 institutions.

"There will be more mergers," he says.

"If you take the next three years, it is not unreasonable to expect a 10 per cent cut in expenditure, and so many of the colleges at the margins at the moment will be in trouble.

"If we get a change in the political climate where there is a restraint or cut in public expenditure, then these colleges will need to merge to sustain any kind of presence."

Sir Bill Moorcroft, principal of Trafford College (created by the merger of North and South Trafford colleges in September 2007), agrees.

"Because of the public spending rounds in the next two to three years, financial expediency will bring people together," he says. "It is highly likely that more colleges will be in financial difficulty, and the only solution to that will be to merge."

Ian Sackree, vice-principal for corporate services at Lincoln College, which merged with Newark and Sherwood College in 2007, also feels that more mergers are inevitable, possibly including another for his own college.

"I feel there is still plenty of scope for quality mergers to take place," he says. "We would like to merge with other colleges. There is strength in size."

Yet unions motivated solely by money are the last thing that most in the sector want. Like most principals, Mr Tavernor believes a merger is only as good as the improvement it brings in educational opportunity and quality.

"First there needs to be a good educational reason for merger; then there has got be good evidence of effective leadership and management; and then there is the economic case," he says.

"Any merger must have some solid educational purpose behind it. You must look for the educational benefit and not the quick financial fix."

Sir Bill also believes the prime reason for merger is the strategic improvement of learning: "If there is a strategic reason for merger, then it is the right thing to do."

Julian Gravatt, assistant chief executive of the AoC, says that while the deteriorating financial position of colleges will act as a driver for merger - and in the past this has tended to mean stronger institutions in effect taking over weaker ones - this should not obscure educational benefits.

"We need to have the best institutional solutions that ensure high quality provision for learners," he says.

Yet, however noble the motivation for merger, successful unions are also expected to produce savings. Economies of scale, increased purchasing power and the rationalisation of staffing and college estates can release funds for merged colleges to begin to realise their ambitions for provision. But reaching the promised land - where a merged college is delivering a better service more cost effectively - is not so straightforward. Bringing together two, sometimes three, colleges, with their respective systems, cultures and personnel, is a major challenge.

"I would never underestimate the differences in culture and in how people behave," says Sir Bill Moorcroft at Trafford College. "I think that if you articulate the ambition and aspiration and you are up front with people, then they will buy into that. You've got to be honest."

Emphasising the positive is paramount, according to Jim Aleander, a consultant who has advised on a number of mergers.

"What marks out the most successful mergers is a very clear vision for the new college," he says. "If it is a problem to be solved rather than a future to be faced, then you are more likely to have a problem with the merger."

There are practical decisions to be made early in the process.

"A lot of time is wasted in pre-merger discussions dancing around each other, not wanting to have to make these difficult decisions," says Mr Sackree at Lincoln College. "But if you know at an early stage who is going to be making decisions in key areas, you do get on more quickly. It is easier if it's one or other senior management team than trying to merge two different teams.

"The very first team you have to have in place is personnel because they will handle the merger."

Mr Sackree speaks from experience. Lincoln opened discussions with Newark and Sherwood in April 2006. It took just eight months, with the formal merger completed in January 2007.

Understanding FE Mergers, a recent report by the Learning and Skills Network, also identified communication with staff as the single most important ingredient for success. "Human resources is probably the biggest factor to get right," said Raj Patel, the network's associate director of research and policy. "The number one issue is how to communicate with staff. Give them an idea of what you are trying to create.

"In some cases, colleges are looking at rationalisation, but how will staff respond to that? The biggest challenge is training up staff and making them feel confident that they can operate in the new system."

Paul Pharaoh, a partner with Martineau, a law firm, has worked on several college mergers and has spotted a common failing.

"People underestimate the amount of upheaval involved in rationalising two, or sometimes more, institutions into one effective college," he says.

Mr Sackree concurs: "It cost us a large amount of work and a lot of stress. We are now starting to see the new culture settle down. Changing the culture is a three-year affair."

Having cleared all the hurdles, merged institutions tend to come out of the process more powerful and more dynamic than their former constituent parts. This is where the benefits lie. Mergers create new models for delivery that in turn lead to new ways of thinking about education.

"There are around 26 large colleges in the country and we could see that number doubling," says Mr Tavernor. "Large colleges will be able to offer services to sustain other colleges, things like financial management and human resources services for local colleges, but leave the educational management to them locally."

Mr Gravatt said: "The college model works, but there is a degree of inflexibility about how they should be constructed. We will have to see in future whether new models of college are emerging."

More mergers will mean more large colleges with all the advantages that greater size brings. But communities are often attached to their local college and can see a merger as a hostile takeover. Added to this is a need to ensure that courses are tailored to local demand and people are not forced to travel miles to study. Both aspects could be compromised by a carelessly arranged merger that overly centralised provision.

If, as looks likely, the trend continues towards fewer and larger colleges, then further education could soon be dominated by a few dozen very large institutions acting as hubs for families of colleges, which they have merged with or collaborate with by offering central management services.

For Mr Sackree, and others, it is an attractive model: "If we could offer something that retains a local brand supported by a big brand, then how can that be a bad thing? Rather than diversity being lost, it is retained but as part of a family."

- Understanding FE Mergers, by Natasha Calvert, is available free from the Learning and Skills Network, www.lsneducation.org.uk

How 21 became 9



Wiltshire College and Salisbury College combine to become Wiltshire College.


Truro College and Penwith College merge to create Truro and Penwith College.

Stockton Riverside College and Bede Sixth Form College are merged into Stockton Riverside College.


North Devon College and East Devon College merge into North Devon College.

Huddersfield Technical College and Dewsbury College become Kirklees College.

Manchester College of Arts and Technology (Mancat) and City College Manchester merge into The Manchester College.

Rodbaston College, Cannock Chase Technical College and Tamworth and Lichfield College become South Staffordshire College.



Eccles College, Pendleton College and Salford College become Salford City College.


Leeds College of Technology, Park Lane College and Leeds Thomas Danby College, become Leeds City College.

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